Every year, we hear orchardists whining about not being able to find enough seasonal workers to pick their fruit, coupled with outrage from right-wing politicians that this is happening when there are x hundred unemployed "in the region" (meaning nowhere near where the work is). The problem is clearly that they are not offering enough money to make the work worthwhile - but I didn't quite realise how bad these jobs were. It turns out that prevailing piecework rates worked out to less than the minimum wage, so it's hardly surprising that people didn't want to take them.
Your post shows a fundamental mis- or rather lack of understanding of economics. Employers, including owners of orchards, do not simply choose a wage rate. The market price of the fruit they sell dictates it. I don't expect an obvious socialist like yourself to be too concerned with business owners going out of business, but once they do they can't employ anyone at a low wage or high one. If they offer too high a wage, they can't sell the fruit and meet their own expenses. So are you willing to pay $4 a piece for an apple that previously sold for $1. And if you are willing, perhaps because you aren't concerned with your own finances, are you willing to tell a poor family that though they once could afford apples, they now can't? Second, you speak so lovingly of the minimum wage, but the minimum wage is a tradeoff. Yes, you get to set a minimum standard of living, but by forcing employers to absorb this cost and pay an arbitrarily high rate, they employ fewer people. So which do you want, fewer people employed but living a higher standard of living or more people employed getting at least some means. Further, the cost of a minimum wage is passed on to the consumer. If you get rid of minimum wage at a bakery, the price of bread drops dramatically. Suddenly, all those people you claimed couldn't live off a minimum wage can no afford bread. I don't expect anyone of your brainpower to understand this, as your blog reeks of ignorant bloviating of the types who don't care to learn the ins-or-outs of the way anything actually works. The law of scarcity, you know, di
ReplyDeleteAnon: I'm constantly surprised by proponents of free markets who are unwilling to accept the consequences of their theories. I'm quite aware that the wages orchardists can offer is driven by the market price of fruit. But the fact remains that at the wages they are offering, they cannot find sufficient workers, even when there are some available (and this problem existed long before the present labour shortage). This tells us that they should be offering more. If they can't afford to offer more, and make lower profits (or find something more profitable to do with their land, or even go out of business), well, that's the market for you. And as for fruit, we'll simply import it from a country where its actually profitable to grow it.
ReplyDeleteIf the government catches someone paying less than minimum wage they should do far worse than jsut asking them to top up the wages (and ignorance is a poor excuse) - that encourages poeple to have them on particularly since hte catch rate as far as I can see is damn close to 0%.
ReplyDeleteI note that the market rate for a chef at a food court is
about 4-5 dollars an hour. And legal firms have a hard time competing in that context.
If we have a minimum wage it should be enforced with heavy financial penalties otherwise the market is unfair.
As for hte minimum wage at a low level there is a very clear justification.
the marginal cost of labour just like the marginal cost of computer software is close to zero - the market will settle down to paying close to zero for all non monopoly labour.
You wnat to prop up wages so at least they are above the marginal cost plust the investment cost (eg education and so forth which in software would equate to software development and setting up of infrastructure capital etc)
At one level these effects dominate and everyone benefits from not allowing capitalism ot run wild (just think in a perfect free market we would remove your monopoly on being able to do wahat you do in order to force your wages down to marginal cost jsut like everyone else.)
At another level probably when minimum wages pass a certain level considering all sorts of other things like how hot the economy is - then the effects you are talking about become more important infact those forced from wages to unemployment may loose more than those who remain employed gain.
the smart position is to realise it is a matter of optimization not of mindlessly following an ideology.